Did your parents struggle to boost their bank account ? Did they miss opportunities to grow their wealth?
If so, they may have passed their money habits down to you. And you might pass them — or other bad habits you‘ve picked up — down to your kids.
Here are the most common bad money habits that you might have learned from your parents.
Make Money: 8 things to do if you're barely scraping by financially
1. Not investing
Saving money is a good habit, but you also want to make additional money on some of the cash you have saved.
If your goal is to build true wealth — or even just to stay ahead of inflation — you will have a tough time getting there if you put all your money in a checking or savings account.
Simply put, these accounts generally do not pay out high rates of interest (with high-yield savings accounts being an exception).
Are you a homeowner? Don't let unexpected home repairs drain your bank account. 2. Thinking that renting is throwing away money
Purchasing a home is a big money commitment. Rushing to purchase a home because you consider renting a waste of money can be a mistake.
Renting offers a certain level of freedom that homeownership cannot match. Changes in jobs, relationships, and family size can quickly change peoples' living needs. If they rent, they can pick up and move when their lease expires.
It’s sometimes quite difficult — and more expensive — to sell a home.
3. Believing that a college education is the only path to prosperity
A college degree can prepare you for a career with a large salary, but it isn’t the only option for everyone.
Tuition costs have risen dramatically over the last few decades, and some careers might not provide a salary that justifies that type of investment.
People should think carefully about enrolling in college. Sometimes, trade schools or certification programs can provide the necessary qualifications to get a good-paying job.
Get Out of Debt for Good: Try these 6 clever ways to crush your debt 4. Viewing all debt as bad
Not all debt is bad debt. For example, taking out student loans today can help secure your livelihood tomorrow.
In addition, most people cannot afford to purchase homes with cash. Taking out a mortgage allows them to invest in a place that can provide a roof over their head for years and decades to come.
With debt, it’s important to preach responsibility. Never take on debt you don’t have a specific plan to pay off.
5. Putting every extra dollar you have toward paying off the mortgage
If someone locks in a good rate on their mortgage, allocating every free dollar toward paying it off might not be their best option.
It’s possible that money could be used in better ways, such as investing or paying tuition costs when retraining for a new career.
In addition, it might make more sense to pay off high-interest credit card debt rather than a mortgage with a lower rate.
6. Doing everything yourself
Doing things yourself can save money, but that doesn’t mean it’s always worth it. When it comes to fixes like home or car repairs, people should hire professionals if they aren’t 100% sure of their capabilities.
After all, trying to fix something incorrectly can lead to more problems and the need to spend even more money.
Also, before tackling a DIY project, people should make sure the investment of time is worth the money they will save. Young people have less free time than they did 30 years ago; paying someone to do a task might make sense.
Can you retire early? Take this quiz and find out. 7. Staying at a good, stable job forever
Previous generations thrived by remaining at the same reliable job until they retired. This scenario doesn’t always apply in today’s world, however.
Changing companies — even when working in the same position — often results in a higher salary. Continuing education can also provide higher earning opportunities in another position.
8. Viewing all credit cards as terrible
Credit cards are only terrible if you use them irresponsibly or don’t choose the right ones. As long as you pay off your debt completely each month, credit cards that offer rewards or cash back can provide great convenience.
When used responsibly, credit cards can also help you raise your credit score. This might allow you to qualify for the best rates on loans.
9. Assuming you have plenty of time to get started with investing
It is never too early to start making investments .
Investing sooner allows more time for investments to grow, which could leave people with more money than if they wait to invest until they‘re closer to retirement age.
Investing early — possibly with the help of a financial advisor — can help you build a strong portfolio.
Grow Your $$: 11 brilliant ways to build wealth after 40
10. Labeling insurance as a waste of money
Health insurance is costly for some people, especially self-employed individuals. Homeowners and auto insurance are not cheap, either.
For that reason, purchasing an insurance plan might seem like a waste of money. But accidents and illnesses happen when you least expect them.
Rather than skipping the insurance altogether, people should compare plans to find the right policy for them at the best price.
Bottom line
If you’ve been managing money as your parents did — or have passed some of these habits down to your kids — all is not lost.
It’s never too late to turn things around and begin making smarter money moves .
Breaking bad habits can help your kids make the most of their money and increase their wealth. The same applies to you, too!
More from FinanceBuzz:
Get Out of Debt for Good: Try these 6 clever ways to crush your debt.
Most Popular
Comments / 0